Buy IndusInd Bank; target of Rs 1175: Reliance Securities

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26 Aug, 2025 12:21

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Reliance Securities reserach report on IndusInd BankNet Profit for 2QFY16 grew by 30.2% yoy and 6.7% qoq to Rs5.6bn primarily led by strong growth in NII and healthy growth in other income. NII has reported a strong growth of 31.3% yoy and 11.6% qoq to Rs10.9bn led by strong advances growth and 20bps improvement in reported NIM to 3.88%. Improvement in NIM was led by the a) acquisition of Diamond Financing portfolio from the RBS, b) capital raising of Rs5.1bn and c) favourable change in loan book mix. Other Income grew by 40.4% yoy and 8.2% qoq led by strong growth in Trade and remittance (50.1% qoq), loan processing fee (38.5% qoq) and third part distribution fee (11.4% qoq). Operating expenses of the bank grew by 30.7% yoy and 11.4% qoq due to front loading of the branch opening during the quarter. The bank has opened 43 branches during the quarter taking the total branch network to 854 branches. However, provision expenses increased 116% yoy and 28.2% qoq led by the higher standard asset provision for recently acquired diamond finance portfolio from RBS.Detailed analysis of Planning Cycle 3 indicates that IIB has clear focus and roadmap in achieving its short/medium-term goals. The bank is planning to increase branch count to 1,200 by end of FY17E; therefore we believe that IIB is likely to sustain strong growth in CASA deposits and fee income. The stress in the CV / consumer finance portfolio has also come off due to improved operating environment. Recent strategic acquisition of loan portfolio from RBS along with fresh capital issuance will help the bank to take advantage of the economic revival and improve its market positioning in both corporate and retail segments. Hence, we continue to recommendation BUY with a Target Price of Rs1,175 (value IIB at 3.5x FY17E P/Adj.BV).For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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